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Advisers given reality check

MFS New Zealand chief executive Jason Maywald tells advisers thinking of selling their businesses that the price paid for Northplan isn’t necessarily how they should value their business.

Thursday, April 19th 2007, 7:03AM

by Philip Macalister

Late last year MFS bought Northplan (now renamed Vestar) for $52 million.

Since then many advisers in the industry have used this transaction in terms of valuing their own businesses.

Maywald says people don’t know the exact details of the Northplan deal so they shouldn’t extrapolate the numbers when considering the value of an advisory firm.

Advisers sitting there saying “Oh well, my business must be worth sixteen times EBIT” are wrong, Maywald says.

“I can assure them that’s not the sort of price we are paying.”

While many people have been stunned by the Northplan price paid Maywald says MFS “got a very good deal.”

“We are not in the habit of overpaying,” he says. “We haven’t overpaid for Northplan.”

Maywald says MFS is looking for other opportunities in New Zealand, not just financial advisory firms.

While not revealing his specific list it includes businesses in the funds management industry, finance companies and structured finance.

He believes his next acquisition isn’t too far away from being confirmed.

Maywald also says MFS has a clear plan of what it is trying to achieve in New Zealand and when it achieves its objectives it will stop acquiring.

“I know when I’m going to stop,” he says. “I have a threshold, but won’t disclose it at this point in time.”

In the advisory market it wants to establish nationwide coverage, but not to the extent of having a firm on “every street corner”. Currently it has the top half of the North Island well covered and the bottom of the South Island.

Maywald says that when MFS buys an advisory firm it takes into account other advisers in the area, especially ones which provide MFS with a good level of support.

The company will communicate with advisers about what is going on as it continues to support independent advisers.

He says MFS is not trying to “undercut” or “steal” business from these firms.

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